2009 (3) TMI 969 - HC - VAT and Sales Tax

Whether, in the facts and circumstances of the case, a second/ separate show-cause notice is mandatory for the levy of purchase tax under section 28(5) of the Haryana General Sales Tax Act, 1973? Held that - Non-issuance of notice or mistake in the issuance of notice or defective service of notice does not affect the jurisdiction of the Assessing Officer to frame a valid assessment if otherwise reasonable opportunity of being heard has been afforded. In the present case we are satisfied that neither any prejudice has been caused nor the provisions of section 28(5) of the Act have been violated. Therefore, the answer to the question is liable to be given against the assessee and in favour of the Revenue

Issues Involved:
1. Whether a second/separate show-cause notice is mandatory for the levy of purchase tax under section 28(5) of the Haryana General Sales Tax Act, 1973.

Issue-wise Detailed Analysis:

1. Mandatory Nature of Second/Separate Show-Cause Notice under Section 28(5):

The primary question referred to the court was whether a second or separate show-cause notice is mandatory for the levy of purchase tax under section 28(5) of the Haryana General Sales Tax Act, 1973. The dealer-assessee argued that without a specific notice under section 28(5), the proceedings for purchase tax assessment could not be validly initiated. The dealer-assessee relied on the judgment in Gopal Oil Mills v. Assessing Authority, Ludhiana [1984] 57 STC 314, asserting that the absence of such notice invalidated the assessment.

The State counsel countered by citing the Supreme Court's judgment in Anandji Haridas and Co. (P.) Ltd. v. S.P. Kushare, Sales Tax Officer, Nagpur [1968] 21 STC 326, which held that the issuance of a notice is not mandatory if a reasonable opportunity of being heard is provided during the proceedings.

The court examined section 28 of the Act, which outlines the procedures for assessment:
- Section 28(1) allows assessment based on the dealer's returns if the Assessing Authority is satisfied with their correctness.
- Section 28(2) mandates a notice if the Assessing Authority is not satisfied, requiring the dealer to produce evidence.
- Section 28(3) provides for assessment after considering the evidence produced.
- Section 28(4) allows for best judgment assessment if the dealer fails to comply with the notice.
- Section 28(5) requires a reasonable opportunity of being heard if the dealer does not furnish returns.

The court noted that the dealer was given a reasonable opportunity of being heard, as evidenced by the dates of hearings and the dealer's cooperation in providing necessary information. The dealer had been actively involved in the assessment proceedings, and the Assessing Authority had relied on the dealer's records due to the destruction of its own records in a fire.

The court also referred to Rule 26 of the Haryana General Sales Tax Rules, 1975, which requires a notice in form ST 25 when the Assessing Authority deems it necessary to make an assessment. The facts revealed that the assessment was finalized with the dealer's cooperation, making the issuance of a separate notice under section 28(5) a mere formality.

The court cited the Supreme Court's interpretation in Anandji Haridas and Co. (P.) Ltd., which held that the issuance of a notice is not a condition precedent for initiating proceedings if a reasonable opportunity of being heard is provided. This principle was reiterated in Commissioner of Sales Tax v. Subhash and Co. [2003] 130 STC 97 (SC), which outlined four principles regarding the issuance of notices and the jurisdiction of the Assessing Officer.

The court concluded that non-issuance or defective issuance of a notice does not affect the jurisdiction of the Assessing Officer if a reasonable opportunity of being heard has been provided. In this case, the dealer had been given such an opportunity, and no prejudice was caused. Therefore, the requirement of a second/separate show-cause notice under section 28(5) was deemed unnecessary.

The court distinguished the present case from Gopal Oil Mills, where the assessment was framed after the expiry of the statutory period and without granting a reasonable opportunity of being heard. Thus, the judgment in Gopal Oil Mills did not apply to the present case.

Conclusion:
The court answered the question against the dealer-petitioner and in favor of the Revenue, holding that a second/separate show-cause notice under section 28(5) is not mandatory if a reasonable opportunity of being heard has been provided during the assessment proceedings.

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